Works really well with no problems that I've seen. Really helps give a bit more of a buffer before applications get killed. Like others have said, with SSD the performance hit isn't too bad.
Get better VPS then. Openvz and other kernel paravirtualization have limits, go for Xen or KVM instead (Xen has paravirtualization as well, but I'm not sure how much it's actually used). Full virtualization (implemented by Xen and KVM) do not allow you to prevent swap from being used.